As Millennials move into their mid-30s, they’re starting families, running their own businesses and planning for the future, but their future is still greatly impacted by their recent past. The Great Recession is still weighing on the youngest working generation and shaping their attitudes on finances.
Millennials having a hard time finding employment
They’ve learned how to manage their finances from their parents and are consciously thinking about how to teach their children about managing money. Long-term goals are ever in mind as they seek a balance between saving and living comfortably right now. Most importantly, understanding how Millennials think about finances will impact the economy going forward.
Bank of America’s Year-End Millennial Snapshot” offers the results of a recent survey of Millennials regarding their financial views and habits. The firm found that nearly one-third of the generation feels that the Great Recession personally impacted them, and of that group, nearly half (46%) said it made it hard for them to find a job. Further, 21% of the group said the Great Recession made it impossible to find a job.
Millennials learn caution from their parents
Millennials also noted that their parents acted differently as a result of the Great Recession, with 67% saying that their parents had to reduce saving or spending and 27% seeing their parents’ retirement savings dwindle. Also 48% of the generation’s survey participants said the economy still impacts their saving habits rather than their spending or investing activities.
Bank of America found that 94% of Millennials don’t feel comfortable going into debt, while 88% aren’t comfortable with risky investments and 79% aren’t comfortable dipping into their savings currently. Further, 81% of participants said that only recently, they decided not to buy something so that they could protect their financial situation, and 60% say it’s challenging to live within their means without overspending. Forty-nine percent said they are focused no on saving for retirement in hopes of removing financial stress later by spending less right now.
The Great Recession also appears to have taught Millennials to focus more on emergencies than retirement, as 61% of those with savings have money stockpiled for emergencies while only 35% have saved up for retirement.
Looking for balance
Bank of America’s survey also found some interesting metrics in terms of Millennials’ spending habits. For example, while the percentage of them who are willing to take on debt is very small, three-fifths still say that it’s important to have enough money right now to live comfortably. Also 17% of them did take on debt to go on vacations, while 8% took on debt to move, and 16% financed their education. These numbers show that those who are willing to go into debt are preferring experiences and education to improve their current quality of life.
Of those who did take on some debt, most say it was worth it, with 89% being happy with their home purchase, 84% expressing satisfaction with their education, 69% in favor of their vehicles, and 62% appreciating their move. Also 52% said they are satisfied with the renovations or other improvements they did on their homes.
Bank of America found that 74% of survey participants pay their bills on time, 58% earn more than they spend, and 56% regularly put money aside for savings. Also the firm said Millennials are just as likely to strike a balance between saving for their dream vacation (32%) as they are to focus on getting the most out of their investments (37%).
Millennials expect a bright future
In the near term, the firm found that 88% of Millennials expect to save more money next year, while 82% expect to invest more. Also 21% of small business owners who belong to the generations said six months ago that their business was in total recovery from the Great Recession, although most remain optimistic about a recovery being on the horizon.
Bank of America also reports that 88% of Millennial business owners expect to see growth in their companies over the next five years, putting them meaningfully more optimistic than Baby Boomer business owners, of whom 56% expect growth. Further, 80% of Millennial business owners expect to see their revenues rise, while 60% of Baby Boomers do. The younger generation also widely expects (74%) economic improvements in the next 12 months.